Thursday, 27 October 2011

Virgin Media CEO on TiVo; Open Platform; IPTV

The main news on TV is strong uptake of TiVo. We have 128,000 net adds
in the quarter, taking us up to 163,000 at quarter end. We've seen
strong demand from both new and existing Virgin Media customers, with
around 1/3 of TiVo subscribers to date being new to Virgin Media. In fact, in Q3, nearly 40% of TiVo net adds were new to Virgin Media.

Sales continued strongly since the quarter end, and as of yesterday,
we have 222,000 Virgin Media TiVo customers. That is around 5%
penetration of our total TV base after just one quarter of
above-the-line marketing. I'm delighted in success we've had this
quarter and with the positive reaction from customers. TiVo will
eventually be rolled out to our entire TV base. The only question is how
quickly, so we're evaluating the opportunity to accelerate this.

So why is TiVo doing so well and how is it changing customer
behavior? Well, firstly, it's a superior product and our customers are
loving the features. It is either a 500-gig or 1-terabyte hard drive,
which can record hundreds of hours of programming. Unlike Sky Plus, it
has 3 tuners so you can actually record 3 different programs at the same
time as watching one you recorded earlier. TiVo really brings to life
our massive, unrivaled video-on-demand library.

For example, our EPG allows customers to go backwards in time and
catch up on shows they've missed. We have great search features that
allow customer to discover content more easily. They can search by
title, by actor, director or topic. TiVo gives intuitive programming
recommendations based on the customers of viewing patterns, again,
helping our customers to discover great programming on both linear and
in VOD. Customers can give a thumbs up or thumbs down to individual
programs to further enhance the recommendation effectiveness. In fact,
the TiVo box will even record program suggestions based on viewing
patterns. So even if like me, you're away and forgot to record the
Mighty New Zealand winning the World Cup, if you're a rugby fan, the box
will probably record it for you anyway.

The other great thing about TiVo is that it's dedicated over-the-top
connection, allowing our customers to access the content and application
outside our TV. Unlike in a DSL home, the bandwidth disconnection users
will not impede the bandwidth of other devices they're using at the
same time.

We have an open platform. We have no fear of adding to over-the-top
provider as an application on TiVo because although TV is the key to the
wallet for us, it is not the wallet. We make most of our margins in
connectivity. We will continue to add innovative applications, like
Spotify, where we're exclusively the only TV and broadband platform in
the U.K. able to offer access to this music streaming service in a
bundled way. We will also soon be launching our companion iPad app.
Through TiVo with the first major operator to launch a TV service that
will ultimately reside on everyone of our customer TVs, PCs, tablets and
mobile devices. It will be the glue that brings together the TV, the PC
and the mobile with a better tablet or a smartphone. It is a truly
converged platform.

Others have talked about launching IPTV. We've done it. We've done it
on time, on budget and it's actually the best product in the market by a
long way. It's a superior service and should continue to see us acquire
digitally savvy customers. Perhaps our competitors' subscribers who are
attracted by the combination of the best broadband connectivity and the
best TV application. It's an ARPU driver because we're charging for
quality with a GBP 3 premium per month. It should also drive improved
loyalty, and therefore, improve churn as we roll it out to the existing
base. And that is a vastly superior service to our existing TV platform.
We will also continue to add increased functionality as the year
progresses. In fact, as flash-based software, it is the service that
will continue to improve and evolve.

Our product today is just at the first round of a very long ladder.
So how are our customers finding it? Well, firstly, they love it. Our
net promoter score or customer satisfaction is much higher for TiVo than
our legacy TV product. In fact, TiVo customers are twice as likely to
recommend Virgin Media to their friends, by telling their friend and
their family about the game-changing technology, about the content
discovery and about their control. TiVo is facilitating the
personalization that customers want. It's liberating them and putting
them in control of their own viewing.

80% say that TiVo gives them more
freedom to watch TV when they want it, 50% are watching more catch-up
TV. Customers are finding the search and browse functions really, really
valuable and engaging with their TV more. Half say they're watching
more good quality TV, i.e. content that is more relevant to them. TiVo
users love the meg of hard drive. 3/4 of our customers say they no
longer have to worry about disk space. In fact, the average customers
whose had the box for 3 months still hasn't filled it up. I think
consumers will continue to get more and more demanding over time, that's
what we're witnessing in this segment that we're targeting. With TiVo,
we have a platform that we'll be able to meet, and in fact, exceed those
demand.